Leocadia Zak on how USTDA has the impact, but needs to get better at the messaging

Leocadia Zak, former director of the U.S. Trade and Development Agency. Photo by: CSIS / CC BY-NC-SA

This article is part of a series of exit interviews Devex is conducting with the leaders of Obama administration aid agencies.

One thing was certain when Leocadia Zak left her job as director of the United States Trade and Development Agency in January: she was leaving her favorite job and the greatest group of people she had ever worked with, she said.

Zak, who took up her post in April 2010, led the U.S. agency charged with project preparation and partnership building to support infrastructure projects in developing countries and in turn, job creation within the U.S. through the export of U.S. goods and services for development projects.

Zak is the agency’s biggest cheerleader, and in an exit interview with Devex just before she stepped down from her post at the end of the Barack Obama administration, she praised the agency’s staff, held up its model as an example, and advocated that it could do more if it only had the resources.

“I've been in the private sector and in the public sector and have never come across such an outstanding group of professionals who are so dedicated to what it is that they're doing,” she said. “But what is I think special is that it's not just that dedication it’s the follow through to implementation.”

Devex sat down with Elizabeth Littlefield shortly before she stepped down from her post as CEO of the Overseas Private Investment Corporation at the end of the Obama administration to hear about what changed during her time at the agency and how development finance has evolved.

While the agency is small, Zak said she believes it could be three times its size. Often, she said, people don’t know about what it does. Still, USTDA has enjoyed support in the U.S. Congress; despite trying times, the agency has either maintained or increased its budget each of the past eight years, she said. The agency showed growth and a significantly higher amount of U.S. exports for every dollar spent by the end of the administration.

When Devex sat down with Zak, she reflected on her time and USTDA and discussed how the agency tackled big issues. She suggests some challenges — and many opportunities — are ahead. Here is an excerpt from that interview, edited for length and clarity.

What do you see as your greatest accomplishments at USTDA?

This has just been an extraordinary time for economic development abroad. I think one of the things from USTDA's point of view is that we have been very excited to see the rest of the world catching up, I would say, with our model of foreign assistance. USTDA's mission is focused on economic development abroad but by also bringing the U.S. private sector to that development. So we for years have focused on catalyzing the private sector, recognizing that they're an extremely important part of economic development abroad, but also it's an amazing multiplier to be working with the private sector. Frankly it's created a win-win situation; it's being able to build infrastructure abroad but also creating jobs in the United States at the same time.

USTDA is at the very forefront in project preparation, and I think that is something that people have realized the importance of: That to be able to obtain financing, and quality financing, you need to have a well-prepared project. What we had heard time and time again is that there is money out there but there aren't well-prepared projects, so people weren’t at the point where they could invest. That recognition of project preparation has really blossomed and is something that has been recognized. It's allowed USTDA to really be a catalyst not only with respect to the U.S. private sector but the private sector around the world.

What was the most challenging part of the job for you?

Not having the amount of resources the agency deserves and could use effectively and ensuring that people know the impact of the agency.

Knowing what we could do with those resources is always frustrating. And I would say, to be honest, that really does sort of have an impact across all of the other agencies. Our sister agencies aren't going to have the projects to move forward with if they don’t have the preparation, and that's what we do. We really are at the beginning stages. So if people are looking to the funding stages or the implementation stages, without this, it’s going to be delayed.

How did the agency change during your time?

We have seen significant growth in many areas. At the beginning of the administration, for every dollar we programmed, we saw $35 in exports. As of last fiscal year, as of September, for every dollar we programmed, we see $85 in U.S. exports. So a significant increase with respect on our return on investment to the U.S. economy over this period of time. The other aspect, and again I credit the administration for its focus on Africa, is that there has been a significant focus on energy in Africa. During the period of Power Africa, we have increased our investment by 800 percent in energy in Africa, and we are already seeing significant returns on that.

The other major accomplishment is that the agency is sort of really good at listening and trying to see what is important to the stakeholders. One of the things we had been hearing from our stakeholders — our stakeholders abroad and our stakeholders in the United States — [is] that a real sort of potential area or stumbling block is their procurement processes.

You’ve been working with the World Bank, which implemented a new procurement strategy after about three years of work in 2016. Tell me a little bit about how you’ve been working to change the norms on procurement?

What our partners abroad were finding is that based on low cost, people didn’t always get what they thought they were getting. They didn’t always get products that lasted for the period of time that they expected. As I like to say, there's nothing low cost about paying for the same thing twice. What we did is we partnered with GW Law School, and we developed a program which is called the Global Procurement Initiative. It's focused on best value with respect to procurements and lifecycle cost.

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What I'm delighted to see today is that we now not only have host countries that are now looking to go in a different direction from low cost, but the World Bank for the first time in 50 years has allowed their recipients to use a lifecycle cost method, so it’s not just least cost. They've also asked to partner with us — so we have an MOU with them — to be a partner to do training together, to do programs together, but to focus on how the recipients of World Bank funding can do other than least cost funding. This is now spreading around the other multilateral development banks. We're really excited about that, because we really think it allows people to get more for their money.

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One of the complaints that U.S. companies sometimes have is that they can’t compete on a low cost bid, because of regulations holding them to higher standards than companies from other countries. How has this procurement work affected them?

That’s part of the equation: we had our stakeholders abroad who were saying we didn’t get what we want, and we had the U.S. partners saying we could have given you what you wanted but we felt because of low cost we weren't going to win. So this is really just leveling the playing field. We felt if we leveled the playing field with respect to procurement, it would give U.S. businesses a fair opportunity, and what we see from development today is people really want innovation, they want the products and the goods and services that can take them to the next level, and this allows that to happen.

You mentioned USTDA as an engine for economic growth and development abroad, but you have also talked about the benefits domestically. Can you tell me more about the agency’s Making Global Local initiative and what role you think it might play as a new administration takes charge?

First of all, our mission itself is to be able to provide for exports, with respect to economic development, which creates jobs in the United States. By virtue of doing the work that we're doing and helping to build the infrastructure, by leveling the playing field for U.S. businesses to have an opportunity to participate in those projects, we are creating jobs in the United States. And clearly when those jobs include exports, those are higher paying jobs, so there's a real direct benefit there.

The other thing is the U.S. is going to need to look for markets, and by having economic development around the world — Africa is a good example — it's creating markets for U.S. goods and services. And as a result, that will create additional jobs in the United States.

What do you think will be the greatest challenge your successor will face?

The one challenge I will say is always ensuring that people know what the agency is doing, how it serves the American public, how fantastic it is at creating jobs and also the impact it has abroad. So I think the hardest thing with an agency of our size is ensuring that we get our message out.

What is the greatest opportunity for your successors? And what is USTDA’s potential?

Frankly the agency should have a much more significant budget, and it does phenomenally with what it has. Our money is invested wisely, and as a result of that investment, we're able to create more exports and more jobs. Every dollar that goes in really has significant impact. If you look at the new focus on project preparation, there's also demand, and the agency is extremely demand driven.

Recently we did a call for proposals with respect to Power Africa, and frankly we only had the ability to fund a very small portion of those proposals. The demand is clearly there, we have to make very tough decisions — which we would anyway, but I mean really tough. There are more good projects than we could possibly fund.

If I were to say what is the right model and you're looking for a model that is going to be good for the American taxpayer, it’s going to be good for job creation, it’s the USTDA model, and you should ramp it up. I've always said that if I were looking at the agency today and creating it today, I would create it at at least three times its size.

If you could change one thing about how development works what would it be?

I know I'm going to sound like a broken record, but I just think that the one thing is the fact that it has to be more like USTDA — that it really should be something that is focused on catalyzing private sector, that works in partnership, that has the ability to bring more to the table. So if I were to change one thing it would be for everyone to understand the USTDA model and to follow it.

About the author

Adva Saldinger is an Associate Editor at Devex, where she covers the intersection of business and international development, as well as U.S. foreign aid policy. From partnerships to trade and social entrepreneurship to impact investing, Adva explores the role the private sector and private capital play in development. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.

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